Bloomberg News

Ruble Weakens to Dollar, Bond Yields Rise on Growth Concerns

July 09, 2012

The ruble depreciated for a fourth day against the dollar and yields on Russia’s international bonds rose after signs global economic growth is slowing cut demand for riskier assets.

The Russian currency lost 0.5 percent to 32.9825 per dollar by the close in Moscow, the weakest level since June 28. The country’s $2 billion of Eurobonds due April 2017 fell, increasing the yield by two basis points, or 0.02 percentage point, to 2.967 percent.

Investors pared bets on higher-yielding assets after Chinese Premier Wen Jiabao said downward pressure on the world’s second-biggest economy is still “relatively large.” Urals crude oil, Russia’s main export, dropped 2 percent to $98.12 per barrel by the July 6 close after the U.S. Labor Department reported non-farm payrolls increased less than expected last month. The commodity rose 0.5 percent to $98.61 per barrel today.

“Local players see the ruble lower by the end of the summer,” Kirill Grishanov, head of foreign-exchange and interest-rate trading at OAO Promsvyazbank in Moscow, said by e- mail. “The street is short on the ruble now, and expects it to fall further to 34 or 35 by September.”

The ruble weakened 0.3 percent to 40.543 per euro and 0.4 percent to 36.3847 against the central bank’s target dollar-euro basket. Investors increased bets on the currency weakening, with non-deliverable forwards showing the ruble at 33.506 per dollar in three months, compared with expectations of 33.3865 per dollar on July 6.

To contact the reporter on this story: Jack Jordan in Moscow at jjordan22@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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